Quick Facts

• Admin fees can reduce your pension by 30% or more
• Typical fees range from 0.5% to 1.5% per year
• 50% of South Africans don’t know what fees they pay
• New 2025 regulations require better fee transparency
• You have the right to question and challenge fees

1. What Are Admin Fees?

Admin fees are charges you pay for managing your pension fund. These fees are taken from your pension savings every year. They pay for things like record keeping and investment management.

The problem is that many fees are too high. High fees mean less money for your retirement. Over 40 years, high fees can reduce your pension by millions.

Important: In South Africa, 50% of pension members don’t know their fees. Many think they pay nothing. This is not true – everyone pays fees.

2. Types of Pension Fees in South Africa

There are three main types of fees in most pension funds:

Administration Fees

These pay for managing your account and keeping records. They are charged as a percentage of your salary or contributions. Typical range: 0.3% to 0.8% per year.

Investment Management Fees

These pay for investing your money in shares, bonds and property. They are charged as a percentage of your total savings. Typical range: 0.5% to 1.5% per year.

Performance Fees

Some funds charge extra if they make good returns. These can add another 0.5% or more. They are controversial because members pay even when markets do well automatically.

Withdrawal Fees

These are new fees since the two-pot system started in 2024. When you withdraw from your savings pot, you pay processing fees. More on this below.

🚨 3. How High Fees Destroy Your Retirement Savings

High fees have a massive impact over time. Every 1% in fees can reduce your final pension by 20% to 30%.

Real Example from South Africa:

Scenario: You save R2,000 per month for 40 years

• With 0.8% fees: Final savings = R6.8 million
• With 1.5% fees: Final savings = R5.9 million
• With 2.5% fees: Final savings = R4.7 million

The difference: High fees cost you R2.1 million! That’s enough to live on for 15 years in retirement.

✅ 4. How to Check What Fees You Are Paying

Many pension fund members don’t know their fees. Here’s how to find out:

Step 1: Check Your Annual Statement

Every pension fund must send you an annual statement. Look for a section called “Fees and Charges” or “Total Expense Ratio”.

Step 2: Ask Your HR Department

If you’re in a company pension fund, HR must tell you. Ask for the “Effective Annual Cost” or EAC. This shows all fees combined.

Step 3: Contact the Administrator Directly

You have the right to know your fees. Email or call the pension fund administrator. Use the contact details on your statement.

Step 4: Request a Fee Breakdown

Ask for fees shown in both percentage and Rand amounts. For example: “My fees were R15,000 last year (1.2% of my fund value)”.

5. Seven Ways to Reduce Your Pension Fees

1. Choose Low-Cost Index Funds

If your fund offers investment choices, pick index trackers. They often charge 0.5% to 0.9% instead of 1.5% or more.

2. Question Performance Fees

Ask why you’re paying performance fees. Many funds charge these even though they just follow the market.

3. Consider a Preservation Fund

If you change jobs, move your money to a low-cost preservation fund. Don’t just leave it with the old fund.

4. Join Larger Funds

Bigger pension funds usually have lower fees because they save on costs. Umbrella funds can be cheaper than small company funds.

5. Avoid Unnecessary Withdrawals

Each two-pot withdrawal costs fees. Only withdraw when you really need the money. The fees add up quickly.

6. Ask Your Employer to Negotiate

Employers can negotiate lower fees on behalf of all workers. Ask HR to review and renegotiate the fees.

7. Compare and Switch

For retirement annuities, shop around. Low-cost providers like 10X, Sygnia, and Allan Gray offer fees under 1%.

⚠️ 6. Two-Pot System: Watch Out for New Fees

The two-pot retirement system started on 1 September 2024. It lets you withdraw from your savings pot once per tax year.

What Administrators Are Charging:

• Processing fee: R50 to R300 per withdrawal
• Verification fee: R30 to R100 for identity checks
• Payment fee: R20 to R50 to transfer money
• Total per withdrawal: R100 to R450

The problem: Administrators made R1.25 billion in fees from two-pot withdrawals in just 5 months! This money came out of members’ retirement savings.

How to Minimise These Fees:

• Only withdraw when absolutely necessary
• Withdraw larger amounts less often (minimum R2,000)
• Check your fund’s withdrawal fees before withdrawing
• Remember: fees plus tax can take 30-40% of your withdrawal

🚨 7. Pension Fund Scams – Protect Yourself

Scammers target pension fund members in South Africa. Be very careful. Here are common scams:

Fake Pension Fund Letters

Fraudsters send letters using fake GEPF or fund letterheads. They ask for personal details or banking information. Never give this via email or WhatsApp.

“Early Withdrawal” Scams

Scammers promise to help you access your pension early. They charge upfront fees then disappear. Legitimate withdrawals don’t need a middleman.

Investment “Opportunities”

Messages from “senior people” offering exclusive investments for your pension money. These are scams. Your fund manages investments – you don’t choose separately.

SMS and WhatsApp Fraud

Messages saying you can resign and get more money. Or links asking you to “verify” your account. Delete these immediately.

Red Flags – Warning Signs of Scams:

• Requests for passwords or banking details via email/WhatsApp
• Pressure to act quickly or urgently
• Promises of “guaranteed returns” or “exclusive deals”
• Requests for upfront fees to access your own money
• Links in unexpected messages (don’t click!)
• Communications from unknown numbers or email addresses

How to Protect Yourself:

• Never share personal details via WhatsApp or email
• Don’t click links in messages – type the website yourself
• Contact your fund directly using known numbers
• If unsure, ask a trusted family member or advisor
• Report suspicious messages to your fund immediately

✅ 8. Your Consumer Rights and How to Complain

You have strong rights as a pension fund member in South Africa. Under the Pension Funds Act and 2025 FSCA regulations, you can:

Your Rights Include:

• Clear information about all fees you pay
• Annual statements showing your savings and fees
• The right to question excessive fees
• Access to your fund’s rules and fee structures
• Fair treatment by administrators
• The right to complain about poor service

How to Make a Complaint:

Step 1: Complain to Your Fund First

Write to your pension fund or administrator. Give them 30 days to respond. Keep copies of all letters and emails.

Step 2: Pension Funds Adjudicator

If you’re not happy with the fund’s response, complain to the Adjudicator. This service is free. They investigate and can order funds to pay you.

Step 3: Financial Sector Conduct Authority (FSCA)

For serious problems like scams or misconduct, report to the FSCA. They regulate the entire industry.

📞 Important Contact Details

💰 Money-Saving Tips Summary

• Check your fees today – don’t wait another year
• Aim for total fees under 1% if possible
• Question every fee you’re charged
• Avoid unnecessary two-pot withdrawals
• Choose index funds over active management
• Never pay upfront to access your money
• Keep your pension savings invested until retirement
• Every Rand saved in fees is a Rand for your retirement

Admin fees can destroy your retirement savings. Over a working lifetime, high fees can cost you millions of Rand.

Take control today. Check what fees you’re paying. Question fees that seem too high. If your fund charges more than 1.5% total, ask why.

Remember the two-pot system fees. Only withdraw when you absolutely need to. Each withdrawal costs money and reduces your retirement.

Watch out for scams. Never give personal details via WhatsApp or email. Your pension fund will never ask for passwords or banking details this way.

Most importantly: You have rights. Use them. Complain if fees are too high. The Pension Funds Adjudicator is there to help you – for free.